Feasibility study of coal mining and benefication project

FEASIBILITY STUDY REPORT
ON
ESTABLISHMENT OF COAL WASHING AND PROCESSING PLANT
PROJECT LOCATION:- OROMIA REGIONAL STATE, EAST WOLEGA ZONE,
HAROLIMU, LIMU AND GIDA-AYANA WOREDA
PREP. BY: BIMAS CONSULTING SERVICES PLC
Cont. Detail: Abenet Ajeme
Tel: +251-911-547-774/+251-936-690-978
E-mail: bimasconsult@gmail.com
abi.academic2022@gmail.com
JUNE, 2021
ADDIS ABABA, ETHIOPIA

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FEASIBILITY STUDY REPORT 2021
C O A L P R O C E S S I N G A N D B E N E F I C A T I O N P R O J E C T Page 2
TABLE OF CONTENTS
I. Executive Summery ………………………………………….…..3
II. Background Information ……………………………...…………5
III. Market Analysis..……………………………………………...…10
IV. Technical & Operational Plan ………………………………...19
V. Organization and Management ………………………………..27
VI. Financial Analysis……………………………………………….30
VII. Annexes…………………………………..……………………….34

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I. EXECUTIVE SUMMARY
ABC MINING Operations Plc was registered and established in accordance with commercial code of the
country as well as under governing rules by Addis Ababa City Administration Trade Bureau. Previously, the
underlying Business Company has been engaged in operating multiple business lines; Such as: Import Trade,
Service delivery business, mining and other trade activities in Ethiopia. Currently, the firm is working on the
establishment of Coal preparation/Washing project strategically in response to the national demand for such
products in the country. The proposed project intends to setup in Oromia Regional State, East Wolega Zone,
Haro-Limu, Limu and Gida-Ayana Woreda and will be able to produce 10,000 tons of Coal products per
year. The Rated plant capacity is 10,000 tons of Coal products per annum working on 8 Hours single shift.
The plant will have the capacity to operate in double shifts, producing 20,000 Tons of Coal powder.
The establishment of an envisaged coal processing project is intended to take part on the development activity
of the country by involving in the mining sector development and manufacturing of industrial minerals which
there exist huge potential market in the country and thereby contribute to the overall national economic
development. The company is inspired to supply various types of processed industrial minerals using modern
supply techniques through creation of employment and saving. In addition, the business objective is to
undertake multiple socio-economic responsibilities on one part and generate income for the company in order
to expand the existing and other development activities in the country.
After successful project implementation and start-up of the operation, the company will explore the possibility
of making takeout and delivering quality coal products through wholesale and retail market outlets. Hence,
the market for the products under consideration is projected to grow rapidly in the coming years. The
products will be supplied to high demanding domestic market and also will improve the supply of coal based
industrial inputs to and improve the lives of local community through employment creation. The coal resource
locally available can be used by cement factories, but it has limitations in quality parameters and
inconsistency in supply. However, these limitations can be improved by value addition processes of coal
washing.
To solve this problem our company ABC MINING Operations PLC, has proposed coal washing and
processing production plant with a170t/h plant capacity working 8 hours per day. The project will process
raw input coal about 408,000 ton to get the net output of 265,200 tons washed coal by considering 65%
recovery rate with calorific value of >500kcal/kg calorific per year at its full capacity operation. The project
will start at 70% operational capacity in the first year and 85% efficiency in the second year and will come to
full scale production capacity in the third year.

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Regarding project financing, the total investment cost required for the project is estimated to be
approximately ETB 427.31million, which intended to cover investment costs of working premises, heavy
duty equipment, machinery, vehicles, working capital requirements, office furniture & equipment and
raw material. Out of the total estimated initial costs, about ETB 107.31 Million will be expected from
owners’ equity contribution and ETB 320 million will be sought from external source as bank term loan.
According to the projected income statement the project will start by generating a net profit of ETB during the
first year of operation. Furthermore, based on the 10 years financial projections the project average annual
net profit after payment of bank interest, depreciation and tax amount is computed to be ETB 65,132,879, and
indicated that the net profit to equity and net profit to total investment or return on investment (ROI) are all
attractive as clearly indicated in projected income statement. The cash flow statement also shows a
substantial amount of cash surplus right from the first year of project operation life. The cash balance grows
from ETB 13,303,047 in the first year to cumulative balance of ETB 812,301,510 at the end of 10th
year of
operation indicating the capacity of the project to finance itself and generate cash surplus for further
investments. On the other hand, based on computed financial measurement parameters, the NPV and IRR
Calculated on the projection are both attractive and acceptable with IRR 18% after tax and the cash flow
discounted at 14.5% resulting NPV of ETB 35,097,557. Added to this, the investment cost and financial
statement projection are used to project the pay-back period and hence it implies that the pay-back period of
invested cost will be fully recovered within 4 (Four) Years.
While considering socio-economic benefits of the project can create employment for 110 persons. In addition
to supply of the domestic needs, the project will generate an average of ETB 22.72 million in terms of tax
revenue each year. The establishment of such project will have a foreign exchange saving effect to the country
by substituting the current imports. Moreover, the company intends to establish relationships based on trust
and mutual advantage through engaging in a wide range of active social responsibility programs. Its efforts
on community service will show that the company has its own community at heart and the project intended to be a
responsible corporate citizen fully contributing positively towards the environment in which planned to operate.
In Conclusion, the Project is found to be operationally profitable & has significant socio-economic benefits.
According to the projected income statement, the envisaged project starts earning profit from the first year of
production. The income statement and other profitability indicators show that the project is viable. The project
is believed to have significant social and economic benefits that accrue to the society beyond those financial
returns to its owner. The most remarkable social benefits can be expressed in terms of job creation that leads to
reduction in the level of unemployment. Therefore, considering the attractive financial and economic benefits that
the project intended to produce, the promoter has made the necessary preparation hoping that all the concerned
government offices and financial institutions should give their support to facilitate the implementation of this plan.

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II. GENERAL BACKGROUND
2.1. ESTABLISHMENT
 Company Name : ……………...
 Company Address : ………........
 Company Formation: ………….
 Company Status : ………….......
 Licensing Organ……………….
 Company Status : ………….......
 New Investment Type : ……….Coal Washing and Processing Project
 Project Location: .……………...Oromia Regional State, East Wolega Zone,
HaroLimu, Limu and Gida-Ayana Woredas
 Total Investment Outlay : ……..ETB 427,306,543
2.2 OWNERSHIP AND COMPANY BERIEF
ABC MINING Operations Plc was registered and established in accordance with commercial code of the
country as well as under governing rules by Addis Ababa City Administration Trade Bureau. Previously, the
underlying Business Company has been engaged in operating multiple business lines; Such as: Service
delivery business, mining and other trade activities in Ethiopia. Furthermore, Company’s General Manager;
Mrs. Banchialem Maru has been running an Existing Business lines as a chief person and also acquired
strategic management of business service delivery and she has a good character and well appreciated
personality among the society. On top of all, the founder who earned experiences in various business activities
has considered the fact that there is a huge gap to meet the demand for and supply of mineral products in the
country.
Hence, currently founders’ of ABC MINING Operations Plc have inspired to establish Coal products
Processing Plant in Oromia Regional State, East Wolega Zone, HaroLimu, Limu and Gida-Ayana Woredas,
where the raw material is relatively available. The establishment of such project is intended to take part on the
development activity of the country by involving in the mining development sector, especially through the
processing and supplying high quality Coal products which is demanded as industrial mineral with huge
market potential.

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2.3 PROJECT OBJECTIVES
The general objective of proposed project is to establish processing plant, which enable the company to
Process about 408,000 tons of Raw-Coal with an Output Capacity of 265,200 Tons final products per year.
The Rated plant capacity is 265,200 tons at recovery rate of 65% quality Coal products per annum working on
8 Hours single shift.
Furthermore, having this general objective it is the ultimate goal of the project to address the following
specific objectives too. Such as:
 To become a leading supplier of quality Coal products and other industrial inputs following
modern marketing techniques;
 To generate income for the company in order to involve in the existing and other development
activities in the country.
 To engage in processing of industrial inputs and sourcing locally, which in turn contribute on
import substitution of manufacturing raw materials,
 To manufacture different varieties of mineral products by using advanced techniques and
enclosures and satisfy the demand of local market
 To create job opportunities for citizens which resulting contribution to un-employment reduction
strategies of the country
 To develop production targets aiming at high quality and quantity standards to be acceptable at
domestic and international level as a known brand.
2.4 SECTORAL BACKGROUND
Modern mineral exploration was introduced in the country during the 1960s when the United Nations
Development program (UNDP) executed a mineral survey in western and southern Ethiopia. Systematic
and integrated mineral exploration started when the Economic Minerals Exploration Department was
organized in 1984 with the establishment of the Ethiopian Institute of Geological surveys (EIGS).
Later the department was reorganized as the Mineral Exploration and Evaluation Core Process (MEECP)
in July 2009.The aim of this core process is to explore and evaluate metallic and industrial minerals and
rocks including coal and oil shale potential of the country and avail the data of these recourses for users
for development and/or further detail exploration ultimately contributing to the socio-economic
development of the nation. During the past three or four decades various occurrences and deposits of
precious, metallic and industrial minerals as well as rocks, coal and oil shale resources have been
identified.

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Most of the explorations related to the understanding of the geodynamic evolution of the Proterozoic,
Paleozoic to Mesozoic, and Cenozoic terrene’s of Ethiopia were intended to determine whether the
Proterozoic basement and other rocks have potential for economic mineral deposits. Systematic regional
geological mapping and mineral exploration activities by the GSE and others were successful in locating
economic mineral deposits in different parts of the country.
These investigations showed that the low-grade belts of volcano-sedimentary successions and associated
intrusive in the north, south and west of the country are most promising for gold and base metal deposits.
Industrial minerals such as rock salt, potash, phosphate, soda ash, feldspar, dolomite, betonies, graphite, lime,
silica sand and kaolin are found in different parts of the country associated with a wide variety of lithology.
Dimension stones including marble, granite, sandstone, limestone, and ignimbrite, raw materials for cement
and aggregate manufacturing, and gemstones of different type and quality are also available in many parts of
the country. Ethiopia is endowed with a wide variety of minerals and rocks, some of which are available
in large quantities and are of excellent quality. Minerals such as potash, bentonite, kyanite, diatomite,
graphite, kaolin, marble, granite, limestone, gypum, sand, etc. occur in sufficiently large reserves that
could warrant medium to large-scale mining.
2.5 PRODUCTS DESCRIPTION, IMPORTANCE AND APPLICATION
2.5.1 Description
The proposed project envisages the setup of a Coal products processing/washing project. Coal washing is
actually the important step of coal preparation. When washing the coal, non-coal materials and
undesirable material from the run-of-mine is washed or cleaned. Through the coal washing plants, a
qualified product will be achieved. The raw coal is mixed with many impurities during the mining
process, moreover, the quality of coal is also different, and the small internal ash and big internal ash of
coal are mixed. The products produced after coal washing process are generally divided into meteorite,
medium coal, grade B clean coal, and grade A clean coal.
2.5.2 The importance of coal washing
By washing coal, can reduce the cost of coal transportation and increase the utilization rate of coal. Clean
coal is an energy that can generally be used as fuel, the fine coal of bituminous coal is generally used for
coking. The main reasons of washing coal are as bellow:
 Improve coal quality and reduce emissions of coal-fired pollutants
 Coal washing can remove 50%-80% of ash and 30%-40% of total sulfur (or 60%~80% of
inorganic sulfur) in coal.

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 Burning coal can effectively reduce soot, SO2 and NOx.
 Improve coal utilization efficiency and save energy
 The improvement of coal quality will significantly improve coal utilization efficiency.
 The ash content of non-valued coking coal is reduced to optimum level and for every 1%
increase, the calorific value is reduced by 200~360J/g, and the standard coal consumption
per kWh is increased by 2~5g; for industrial boilers and kiln burning washing coal, the
thermal efficiency can be increased by 3%~8%.
 Optimize product structure and improve product competitiveness
 The development of coal washing is conducive to the transformation of coal products from
single structure, low quality to multiple varieties and high quality, to achieve high quality
products.
 Reduce capacity waste
 Because the coal-producing areas are far away from the economically developed areas
with more coal, the coal transportation volume is large and the transportation distance is
long and implies the higher transportation costs. Whereas, after washing, the coal can
remove a lot of impurities and wash 100Mt of raw coal can save 9600Mt-km capacity.
2.5.3 Uses and Application
Coal has a high degree of coalification with a gross calorific value above 23,865 KJ/kg (5,700 kcal/kg)
on an ash-free but moist basis, and a mean random reflectance of vitrines of at least 0.6. Slurries,
middling’s and other low-grade coal products, which cannot be classified according to the type of coal
from which they are obtained, are included under hard coal. There are two sub-categories of hard coal: (i)
coking coal and (ii) other bituminous coal and anthracite (also known as steam coal). Coking coal is a
hard coal with a quality that allows the production of coke suitable to support a blast furnace charge.
Steam coal is coal used for steam raising and space heating purposes and includes all anthracite coals and
bituminous coals not classified as coking coal
In general Coal is applicable almost in every manufacturing sector as industrial input minerals including
production of below listed industrial outputs. Coal is one of the most useful fossil fuels. It has many
applications, some of which include the production of heat for households, firing of industrial generators,
manufacturing of cast iron. Accordingly, the application of Coal product involves:
i. Steel Industry
Metallurgical coal, or coking coal, is a vital component of steel making. In fact, about 3/4 of the steel
produced today uses coal.
ii. High-Technology Products

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Coal and its by-products are used to make materials that can be found in our computers, smartphones, DVDs,
lasers, LEDs, and other consumer electronics. Not only are coal products used in the production of the metals
needed by the technology sectors but these high-technology products are also made with rare earth elements.
iii. Automobiles
Besides the steel, aluminum, and electronics found in the automobile, coal products are used in the value
chains of rubber products used in tires, and they have been used to make transportation fuels.
iv. Chemicals
Chemicals that are produced from coal are used for wood preservation, rubber products, and even shampoo.
Other examples of chemicals from coal products include fertilizers and waxes, such as those coat paper cups.
v. Filters For Water And Air Purification
Coal products find applications in pollution prevention and other environmental processes. Activated carbon,
a component of coal, has the ability to extract impurities and contaminants. Activated carbon is often used to
make filters for water and air purification systems, and it’s even used in kidney dialysis machines.
vi. Aluminum
While anodes for the aluminum industry are currently made from petroleum coke and pitch, coal powder
and coal pitch can be used as alternatives which can help bring down the cost of aluminum.
vii. Cosmetics
Coal is vital to creating silicon metal, which is used in a wide range of cosmetics including makeup,
soaps, perfumes, and lubricants.
viii. Construction Materials
A common use of coal and coal ash is as feedstock for the production of cement. However, coal by-
products are used in a variety of other construction practices. One example is carbon fiber, a by-product
of coal extremely strong but also conveniently lightweight. It is not only used in construction materials,
but also to make hard hats, mountain bikes, and tennis rackets.
ix. Medicine
We’ve already talked about how activated carbon is used in kidney dialysis machines, but coal has other
medical uses, too. For example, coal tar has been used to make aspirin and other similar medicines.
x. New Materials And Advanced Manufacturing
Besides their common use in the production of steel and aluminum, coal products are used to make
advanced materials with advanced manufacturing processes, such as 3D printing.

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III. MARKET ANALYSIS
3.1 GENERAL BACKGROUND
Ethiopia has many advantages as a destination for mining investment. These include promising geology,
a well-designed fiscal regime, stable government and a growing domestic market. Additionally, it has a
well-managed and successful artisanal and small scale mining sector. Under the second phase of
Ethiopia’s Growth and Transformation Plan, Ethiopia has the ambitious target for the mining sector to
contribute 10% of GDP by 2025. The Ethiopia Government has been showing concern over the supply of
Coal and lime products to various consumers within in the country. Demand has been steadily increasing
and there has been no indication of any new, local producer of Coal products which could meet this
demand. Indeed, there is a continued increase in Coal products import. The existing small-scale coal
processing operations have been besieged by costly increases in energy and their output is on the decline.
3.2 COAL MINING IN ETHIOPIA
3.3 COAL RESOURCE POTENTIAL IN WESTERN ETHIOPIA
3.4 DEMAND AND SUPPLY TREND
3.4.1 Demand Consideration
3.4.2 Supply Trends
3.4.2.1 Local Production
3.4.2.2 Import
3.4.3 Projected Demand and Supply Gap Analysis
3.5 TARGET MARKET PLAN
3.6 MARKETING STRATEGIES
3.6.1 Product Quality
3.6.2 Product Pricing
3.6.3 Product Promotion
3.6.4 Delivery/Channel Strategies

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IV. TECHNICAL ANALYSIS
V. ORGANIZATION AND MANAGEMENT
5.1. INSTITUTIONAL SET-UP AND ORGANIZATIONAL STRUCTURE
5.2 ORGANIZATIONAL STRUCTURE
5.3 MANPOWER PLANNING
5.3.1 Number of employees
5.3.2 Training requirement
VI. FINANCIAL ANALYSIS
6.1. BASIC ASSUMPTIONS FOR FINANCIAL ANALYSES
6.2 RESULT OF FINANCIAL ANALYSIS
VII. ANNEXES

Feasibility study of coal mining and benefication project

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